Cerner hits record bookings, looks to pop health for growth

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Dive Brief:

Cerner reported a record number of bookings in Q4 FY17, weighing in at $2.3 billion, a 62% increase over the same quarter a year earlier.

Revenue for the quarter was $1.3 billion, a 4% increase over the same time period in 2016. Revenue for the full-year was $5.1 billion, up 7% compared to a year earlier.

However, the health IT company's earnings-per-share for the quarter were $0.58, down from $0.61. “We finished the year on a mostly positive note, with record bookings and all other key metrics except for earnings in line with our expectations,” President Zane Burke said in a prepared statement.

Dive Insight:

Executives highlighted international business and revenue cycle and population health products as areas of growth for the year.

Though the company expects to expand margins in 2018, Chief Financial Officer Marc Naughton forecast headwinds in the near term. He expects a large increase in non-cash software amortization and depreciation related to large investments in software development.

"Another factor is that we expect traditional software revenue to be relatively flat due to the maturing EHR market [and] a shift to more SaaS models," he said.

Comments on the call underscore a trend developing in the health IT vendor community: shifting to building out administrative tools.

Administrative tools may offer a growth opportunity for vendors looking for profits in a post-federally funded sales period.

Burke also said population health efforts were important for the company in 2018.

"In population health, we continue to make good progress at adding clients to the HealtheIntent platform and ended the year with 144 unique clients," he said on the earnings call. "For the year, population health bookings grew 42% and revenue grew 20%."

HealtheIntent, the company's pop health product, can help clients with accessing healthcare data, creating longitudinal healthcare records and integrating and disseminating data, Burke said. "I feel very good about the market position that we've put ourselves into and I think there's only going to be growth in the addressable market for that toolset as we move forward," he said regarding Cerner's future in population health.

The product was rumored to be part of a reported deal with Amazon. The deal was not been announced nor was it addressed on the earnings call.

Cerner expects FY18 revenue between $5.4 billion and $5.6 billion. Full-year adjusted diluted EPS are expected to be between $2.57 and $2.73.